Over the past few months I’ve been reading a lot of books and have briefly experimented with learning the process of starting a new venture for a course I was taking. After getting feedback on it and through all the reading I’ve done, I decided to jot down my thoughts on building products.
Step 1: Plot idea on business model canvas – What’s my idea? Does it make sense?
Using the business model canvas framework, answer key questions on the premise of the business: what customer segments am I going after, what is my value proposition and key partners, activities, etc. You also have to keep in mind what is the potential market size, your ability to penetrate that market (e.g. is part of this market underserved?), price, competition, and the viability for profitability.
Step 2: Customer discovery – Is there a market?
This step is about finding a problem-solution fit. Are you really solving a problem for a group of people. To validate your assumptions on your solution, propose a minimum viable product and talk it to prospective customers.
Step 3: Customer validation – Who should I target? What do they want? How do I reach them?
Now that you know there is a market for your product – you must validate their words. Validate the idea by developing a minimum viable product. Ship it to customers and validate product-market fit through continuous experimentation with the MVP. Gain early sales as a proof of product-market-channel fit rather than just intent.
Step 4: Throw gas on the machine and growth hack. How do I scale?
Explore your acquisition channels measuring your customer acquisition cost, based on your business model. Look at the various traction channels – ASO, SEM, PPC, email, content marketing, partnerships, affiliate, landing page optimization, viral, sales, etc. As you get more data, build lifetime value models segmenting by channel, plan type, and customer type, amongst other factors.
Activate your users by optimizing around getting users to your core ‘aha’ moment as soon as possible. The faster people understand how to use your product, the more activated they will be, and the longer they will stick around.
Then make sure you don’t have a leaky bucket and retain users. Run different A/B/multivariate tests, perform cohort analysis on groups of users, and build in predictive modelling for disengagement and engagement factors. If users are still not very sticky, think about re-engagement tactics including push notifications, email, gamification, etc. You want users to build a habit around your product.
Think about getting users to get their friends to join. Build two sided referral strategy, using a give and get approach. You can also exploit partnerships that are mutually beneficial as a means to persuade users to join.
Finally, focus on revenue. Think about price elasticity and plans based on persona and value. Look at how pricing impacts churn, how the unit economics works on per buyer person, and really carve out plans that work for your customers. Upselling can be included here, and also making sure you have correct analytics for monetization (CPMs for ad based businesses, MRR/ARR/churn for SaaS companies, etc.).